Governor's tax proposal could affect exemptions

UPDATED 9:29 PM CST Jan 17, 2013

LINCOLN, Neb. -

Gov. Dave Heineman got Nebraskans’ attention this week when he announced a plan to eliminate individual and corporate income tax.

If the tax was eliminated, more than $2 billion would have to come from somewhere else. Currently, the city does not charge sales tax on the laundromat, newspaper, lottery tickets or flowers ordered from another state, just to name a few.

For the income tax to go away, Heineman will have to decide which of the 75 tax exemptions would have to be eliminated.

“We've got to compete with other states. We've got to compete worldwide and you have to be tax competitive. I figure other governors have figured that out just like we have,” Heineman said.

Omaha Sen. Pete Pirsch said he has figured out a different plan that does not respond to or oppose to the governor’s plan. He said his plan would change income brackets and lower the tax for all.

“One thing we can control in this state is our tax climate. And we are not doing our best right now, that we are using that in a positive way, a way to keep people in the state of Nebraska,” Pirsch said.

Some experts warn Heineman's plan could go too far, too fast. In a forum sponsored by Nebraska's OpenSky Policy Institute, a Connecticut professor told several lawmakers that "sudden, dramatic changes to tax policy could make state revenue volatile because sales tax revenue can fluctuate with the economy."

The governor will hold a news conference Friday morning.

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